Potash Corp., Agrium said in advanced talks to merge

Potash Corp., Agrium said in advanced talks to merge

ROD NICKEL AND ANKUR BANERJEE

Reuters

Published Tuesday, Aug. 30, 2016 10:11AM EDT

Last updated Tuesday, Aug. 30, 2016 11:12AM EDT

 

Canadian fertilizer companies Agrium Inc and Potash Corp of Saskatchewan Inc are in talks to merge, Bloomberg reported on Tuesday, in what would be a tie-up of the world’s biggest crop nutrient company by capacity and North America’s largest farm retailer.

U.S.-listed shares of Potash and Agrium rocketed up 13 and 8 per cent respectively, before being halted for pending news.

The combination could be announced as soon as next week, Bloomberg reported, citing people familiar with the matter.

No final decisions have been made and the companies could decide against a deal, Bloomberg said.

Spokespeople for the companies could not be reached.

Fertilizer companies have suffered lower profits as prices of crop nutrients, especially potash, have tumbled to multi-year lows due to excessive supply and weak demand, tied partly to softer currencies in buyer markets such as Brazil.

“I think (a merger) will make them a better force to compete on a global scale,” said Mohsin Bashir, portfolio manager at Stone Asset Management Ltd, which owns Agrium shares, adding however that regulator approval may be difficult to gain.

Potash Corp is the third-biggest seller of potash globally, but owns the most capacity, some of which is idle due to the industry’s slump. It also produces nitrogen and phosphate fertilizer.

Merging with Agrium would give Potash a direct channel to U.S. farmers through Agrium’s retail stores, which as of May accounted for 17 per cent of the U.S. market.

It also would allow Potash to diversify from its heavy weighting in its namesake nutrient, said Chris Damas, principal of BCMI Research.

Shares of Potash Corp, which had a market valuation of about $17.54-billion as of Monday’s close, were up 13.4 per cent at $18.20 in New York.

Agrium, which had market valuation of about $16.10-billion, was up 7 per cent in Toronto at $124.81.

Stocks of U.S.-based Mosaic Co, which produces potash and phosphate, jumped 8.3 per cent to $30.28.

 

About prosperitysaskatchewan

Consultant on Saskatchewan's natural resources.

Posted on August 30, 2016, in economic impact, miscellaneous, political, potash. Bookmark the permalink. Leave a comment.

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